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Survey: Prospective Students Still Focus on Sticker Price

Many admissions officers, not to mention college presidents, have for years complained that prospective students focus too much on "sticker price" (stated prices of a college) rather than the actual cost to students and families (which may be considerably lower than sticker price, once aid is factored in). A new survey by the Art & Science Group and the College Board of SAT test-takers finds that the frustration is likely to remain. More than half (54 percent) of students reported that they judge a college's cost by sticker price without considering financial aid. And the survey was conducted in last 2012, after much publicity over the availability of "net price calculators," which allow those who share basic financial information to find out how much aid they would receive at a given college.

 

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Uncertain Economy Takes Toll on College Savings, Survey Finds

Despite headlines about the rising price of a college degree, fewer families are saving money for college and fewer have a plan to pay than in the past, according to a survey released today by Sallie Mae. The annual survey about families' saving habits found that only 50 percent of families with children younger than 18 were saving for college, a drop of 10 percentage points from 2010. On top of that, 16 percent of respondents said they were saving less than the previous year, citing unexpected expenses, higher cost of living, and lower income. When asked to describe their feelings about saving for college, parents were more likely to say that they felt overwhelmed, annoyed, frustrated, or that they don't like thinking about it than they were to say they were confident.

College Scorecard's flawed focus on average net price

The Obama administration unveiled its new College Scorecard with much fanfare this month. Highlighted to college-bound students as a way to “get the most bang for your educational buck,” the Scorecard is intended to serve as a consumer guide for higher education. The first section of the Department of Education’s new College Scorecard features the average net price of attendance at the selected institution. To guide users, the scorecard categorizes these average net prices as low, medium or high.

There’s just one problem: no student is average.

Consider a low-income applicant to the University of Pennsylvania, a school with a high sticker price. At Penn, a full-price student pays $59,600 (including tuition, room & board, and other fees) and a low-income student with a full scholarship pays $0. The average net price across these two students is $29,800. (As it happens, Penn’s reported average net price is $20,592.) Just like high sticker prices, high average net price can mislead students from modest circumstances looking for affordable college options. Many colleges – particularly prestigious schools with high sticker prices – are committed to building socioeconomically diverse student bodies. At such schools, students’ individualized net prices can vary significantly depending on their financial circumstances.

Would-be college students can access this kind of information before they decide where to apply to school. The Higher Education Opportunity Act of 2008 (HEOA) required all postsecondary institutions receiving Title IV funding to post net price calculators (NPCs) on their websites by October 2011. Using NPCs, students can identify their likely cost of attending different institutions – a number that often varies widely between students based on their state of residence, academic performance, personal income, assets, the number of family members also attending college and a variety of other factors. An individual student's net price is often different from both the school’s full-fare “sticker price” and the average net price.

The administration seems to be focusing on the College Scorecard, so we hear little about the net price calculators these days. Like the College Scorecard, NPCs offer key financial information to students and families prior to application and matriculation. The College Board’s 2012 study revealed that more than half of college-bound seniors from lower-income and middle-income families still rule out colleges on the basis of sticker price, but with the advent of NPCs, students from all backgrounds can identify affordable college options before they decide where to apply.

This innovation has the potential to turn college advising on its head. Instead of discussing financial aid after students have received acceptance letters in senior spring, counselors can help students build application lists in junior spring that take financial aid into account. With the Scorecard’s average net prices, high schools students are left with yet another one-size-fits-all ranking of affordability; in short, it is not much better than the starting “sticker price.”

To demonstrate the relative importance of individualized net prices, let’s take a look at the projected cost of college for Cristina Moreno, the narrator of the 2004 film “Spanglish” and a first-generation low-income minority college-bound student. Here, we have compared Cristina’s individualized net prices with the average net prices for three schools: University of California at Berkeley, New York University and Hampshire College.

For low-income students like Cristina, the College Scorecard misses the mark – sometimes by a big margin. As with sticker prices, these average net prices can indicate to low-income students that they will find neither financial support nor a warm welcome at selective schools.

Ultimately, the White House College Scorecard serves two important purposes: it provides policymakers a high-level view of the affordability of a school, and it provides students a more user-friendly portal to access existing summary data.  Though the average net price might be helpful to policymakers trying to manage the overall cost of education in America, students making the biggest investment of their lives need easy access to detailed, individualized information. The Center for American Progress – which issued criticism of the draft College Scorecard in 2012 – praised the new version for including a link to each school’s NPC. Even so, parents and students would need to visit each school’s individual NPC – adding time and repetition to an already complicated college search – and then decode the distinctive results pages generated by calculators built by the numerous vendors in the space.

Despite the advantages of using net price calculators to identify affordable schools, the CollegeBoard’s 2012 study revealed that only 35 percent of college-bound high school seniors used NPCs during their college search. Initial efforts to promote NPCs included a video contest and substantial press coverage, but many college access professionals and counselors still aren’t aware of the net price calculators, let alone the federal requirement.

A report issued by The Institute for College Access and Success (TICAS) in October 2012 asserted that “net-price calculators are still not reliably easy for prospective college students and their families to find, use, and compare,” noting (among other issues) that many schools post NPCs on obscure web pages.

Theoretically, links to all NPCs have been available since 2011 on the Department of Education's College Navigator, but the list posted there is far from accurate; in 2012, our team spent more than 500 hours identifying the correct links for all 7,000+ schools and campuses receiving Title IV funding. A quick check of the College Scorecard’s NPC links revealed the University of West Alabama’s NPC link actually directs users to its homepage, but at least the calculators garnered a spot in the new system.

Regrettably, in drafting the HEOA, Congress missed an opportunity to create a centralized system based on the individualized net price concept. HEOA did not compel schools to adopt a specific net price calculator, and the implementation of the NPC requirement has yielded more than a dozen different calculator types with hundreds of variations. To generate of individualized net price results across all schools in a College Scorecard type system, the federal government would need to compel the adoption of a universal net price calculator format and amend HEOA. Such a requirement would place an additional burden on college financial aid offices, but would certainly benefit students seeking a bigger bang for their buck during the college selection process. 

At College Abacus, we are closing the gap between legislation – and its goals – and the actual needs of students, parents, and counselors around the United States. We are taking on the task of aggregating the net price calculators into a single, student-friendly tool. With the help of a grant provided by the Gates Foundation’s College Knowledge Challenge, we expect College Abacus to expand from its current group of 4,000+ schools to include all US colleges and universities by September 2013.

Given the 1 trillion dollar student loan crisis, students need help identifying colleges that they can afford. The College Scorecard may have stimulated conversation on this critical issue, but it is unlikely to serve our most vulnerable students in their pursuit of affordable higher education.

Abigail Seldin is the CEO and co-founder of College Abacus, and an ABD DPhil in anthropology at the University of Oxford.

The Vet Debt Surge

For years, veterinary medicine has been a field with a limited number of slots for students and, theoretically, good career prospects. But after years in which enrollments have grown and the numbers of pets and veterinary visits in the United States have declined, new veterinarians are facing a debt crunch, The New York Times reported. Salaries have fallen, and the average debt to income ratio for new D.V.M.s is now twice that of M.D.s.

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Federal agency requests comment on private loan modifications

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Consumer Financial Protection Bureau asks for suggestions on how borrowers might refinance private student loans.

Essay questioning the way politicians are framing the issue of college value

President Obama’s call for a renewed emphasis on "affordability and value" in assessing colleges and universities pairs those two terms in a way that simultaneously highlights their difference and the degree to which they have become interchangeable in much of the current discourse about higher education. There is a growing consensus within the higher ed community that we need to do a better job of "defining the value proposition" of liberal arts education. There is less agreement, however, about what is meant by "value."

Media reports like the ongoing New York Times series "Degrees of Debt" are quickly solidifying a public perception of the value of an education as a straightforward calculation of a graduate’s future earnings minus cost of attendance. Even if we set aside the compelling arguments one can make for the intrinsic and civic value of a liberal arts education, and stick with an economic cost/benefit analysis, such an equation fails to capture the complex feedback loop that is higher education finance. In particular, it ignores the degree to which value is affected by demand, and demand is affected by many of the very qualities that contribute most significantly to cost.

Three reports that have come out within the last month provide an interesting cross-section of the issues. In early January, a panel discussion at AAC&U on "The Economics of the Liberal Arts College" included the presentation of data from Charles Blaich and colleagues at the Wabash Center of Inquiry in the Liberal Arts claiming that less expensive colleges offer more "bang for the buck" than do higher-priced institutions. On January 10, Moody’s released a report offering a "negative outlook" on the entire higher education sector, citing in particular "weakened pricing power and enrollment pressure." And finally, a study by two University of Michigan economists published by the National Bureau of Economic Research found that, contrary to popular belief, investing in the "consumption amenities" that are so often derided by commentators in fact heightened demand and increased value for less selective colleges — i.e., made economic sense.

Most commentaries on the high cost of higher education assume as a matter of course that student demand will correlate positively with affordability. In fact, despite the current storm of criticism, demand remains high at many of the most expensive colleges, most of which offer generous financial aid. Since level of student demand is one of the major inputs driving the perceived quality and pricing power of a school, any calculation of "value" needs to recognize that economic value is not synonymous with low price. On the contrary, where high price is matched by high demand, the two reinforce each other, as high demand justifies high price, and high price reflects a level of demand that contributes to reputation.

There are several flaws in the claim that in higher education, economic value = future earnings – price paid:

  • It assumes that one can discuss "higher ed" as a unified sector, whereas institutions and curriculums differ hugely, and student backgrounds and preferences vary just as greatly. The "value" of a particular degree is not an absolute; it is relative to the goals of the individual student. What may make one college “worth it” for one student may not be equally valuable to another.
  • It assumes that higher education functions as a product, which consumers are likely to want to buy at the best available price. In reality, higher education is an investment, and many consumers understand that they are not buying a four-year experience; they are investing in the future value of their diploma. Hence, the college’s desirability and reputation are relevant economic factors that need to be taken into account, and any reduction in services or "amenities" that decreases desirability may have a negative impact. Any development officer will tell you that alumni support the institution not only to enhance the education of current students, but because a stronger institution increases the prestige attached to the education they themselves received.
  • It assumes that affordability is an easily defined variable that can be listed and compared, whereas different financial aid policies at each institution, and different financial situations of individual students, make the actual "cost" of each institution highly variable.
  • It assumes a clear distinction between the "education" offered at a college and the nonessential "amenities" that could presumably be easily discarded. But the residential college experience does not divide neatly into two columns, with professors’ salaries on one side, and climbing walls and "nap pods" on the other. The primary value of the residential college is in its integration of academic and co-curricular activities within a 24/7 learning environment that fosters growth inside and outside the classroom. Pulling apart these strands would significantly diminish the educational experience. Most students would not consider music ensembles, career placement, counseling services, and volunteer opportunities, for example, to be "amenities." And, as I have argued elsewhere, support of faculty research is not strictly speaking an instructional cost, yet the presence of tenure-track faculty who conduct research is an important marker of institutional prestige that contributes to a college’s value.
  • It assumes that when students and families complain that college is too expensive, that means that they want colleges to cut costs, i.e., change the way they operate. However, all of the facilities and services that colleges have been competing to provide are the result of student demand for those services, and one seldom hears about campuses where students are lobbying to have them reduced. Families seeking less-expensive options may well choose a college that allows the student to live at home, but those who choose a residential college experience for their student don’t want those colleges to offer a "cheaper" education. They want a bigger discount on the education they are receiving. This would require increased public funding, or increased endowment.

Ultimately, many families understand what many higher ed commentators do not: that the link between price and “value” in college tuitions is already so tenuous as to seem wholly arbitrary. This is not because colleges get away with charging too much. It is because they already charge too little. The market price of a product is always somewhat arbitrary, as it reflects what people are willing to pay rather than a product’s actual production cost, let alone some intrinsic value. But what other commodity is routinely offered at a cost substantially less than the price of production, and then discounted again based on the consumer’s ability to pay? At the most expensive colleges, the cost per student is thousands higher than the tuition price, and the endowment already subsidizes every single student, even those paying “full freight.”

In thinking about where money plays into our understanding of the value of the education provided by a college, we might line up cost, price, and prestige, and picture them as points along a continuum. At the cost end, we have the full monetary value of an education, that is, actual funds expended to provide it; next, a tuition fee that partially reflects cost, but also reflects the other resources available to subsidize it, as well as the market’s willingness to pay; and finally, the value publicly attributed to the education provided, a value that may be realized by the owner of a diploma when he or she gets a job or other benefit based in part on the prestige of the college he or she attended.

The progression from concrete funds expended to abstract benefit gained gradually transfers economic value from the institution to the student. Over time, the value of the investment made is more than recouped (and recent studies show that this continues to be the case). Finally, in a feedback loop that is unique to higher education, the owner of this investment may ultimately return value to the institution, either by donating funds, or by enhancing the college’s reputation through his or her own success. Thus, tuition paid is not complete payment for a discrete good or service, but partial payment towards a lifelong investment.

By framing this argument in economic terms, I am not buying into the notion that the primary value of an education is economic, but trying to show the limitations of that analysis. We all recognize that we must work as efficiently as possible to focus our resources on our core missions. But we also need to recognize that lowering costs does not always increase value. Given all of the commentary over the last decade about the increasing elitism of higher education -- the challenges of gaining admission to top institutions, the increasing competition among institutions to move up in the U.S. News rankings — I find it astonishingly naive to imagine that public perception of the “value” of an education from a particular college is not affected by its perceived status. And one thing that we all know from the U.S. News wars is that status comes at a high cost. No one ever rose in the rankings by increasing class size, paying their faculty less, or hiring fewer fund-raisers.

All the more reason, then, to refocus the discussion on the multiple forms of value, tangible and intangible, that can be derived from a college education, rather than imagining value can be reduced to a single measure. If the price tag of a college education represented its real value, then a fully funded fellowship to Harvard University would result in a worthless degree.

The real value of an education lies in a unique nexus of opportunity and effort that produces a different outcome for every student. Rather than using imperfect mechanisms of accountability to tighten the link between affordability and value, our task should be to loosen it, and generate the resources needed to give all students access to the education that best serves their individual talents and aspirations. That would be value added.

Alison Byerly holds an interdisciplinary appointment as college professor at Middlebury College, and is currently a visiting scholar in literature at the Massachusetts Institute of Technology. In July, she will become the 17th president of Lafayette College.

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Essay urges liberal arts colleges to create a measure of civic engagement

After this winter’s National Association of Independent Colleges and Universities meeting, the challenge voiced by a panel of Congressional staff members still rings in my ears. They asked: What is the return on investment for the $150 billion in federal grants, loans, and tax credits to higher education?

They suggested that this investment must have a pay-off measurable in the number of degrees completed, jobs attained, and salaries earned. It’s not only members of Congress and President Obama who want to know the value of a degree. The public – as reported in media coverage – also questions the cost of a college education, the debt incurred, the prospects for a job to pay off that debt, and whether recent graduates are employed, underemployed, or moving back home.

More urgently these days, colleges need to answer the question: Is it worth the cost? Just after President Obama’s State of the Union address, the White House released a “scorecard” on college performance measured by cost, graduation rates, borrowing, loan default rates and employment statistics. The public deserves to know these figures but the criteria do not go far enough in defining the value of a college degree.

The questions raised by politicians, policy makers, and parents remind me of another question, one not considered in the NAICU briefings: Are colleges and universities fulfilling their civic mission? What if we redefined “worth”? What if we could measure the return that educated citizens give to each other and the nation?

We need to redefine what the “return” means. We claim that we produce the inquiring, analytical, vocal, and engaged citizens required for a vital democratic system, but do we present the civic value of our missions forcefully enough to enter into and even change the public discourse?

I propose that colleges create a new Civic Scale, which does two things: 1) analyzes our courses, independent studies, and community activities to determine to what extent we teach democratic behaviors; 2) and surveys our alumni at various stages of their lives to determine if they are demonstrating key civic attributes.

What might we measure while students are undergraduates? There would be measures of history, political science and cultural studies courses that give students perspectives on our own democracy and other systems; humanities and arts courses that develop awareness of others’ lives and cultures; engaged learning and internships that develop skills in community organizing and instill knowledge about the competing forces in a democracy; and campus participation, where students practice voicing reasoned opinions and helping each other.

We should survey our alumni at least every five years to ask questions like:

  • Do you vote; how often?
  • Do you volunteer with a community organization?
  • Have you run for office?
  • Have you written to someone in elected office or published a letter to the editor?
  • Do you give to your favorite causes?
  • Do you attend civic meetings or organize to make change?
  • Do you participate in your children’s schools?
  • Do you attend cultural or other events that strengthen your community’s life?
  • Do you work for a nonprofit or an organization focused on education, the arts or social justice?
  • After college, did you join the Peace Corps or Teach for America?

We may find out that the more civically engaged students are also those who are the informed activists of today. Their behavior may even correlate with both economic success and the more elusive “pursuit of happiness.”

I’m an example of this interconnection, a product of a “liberating arts” education: a B.A. in philosophy from Bennington College, my M.F.A. in creative writing from Warren Wilson College, and a daily participant in the life of Marlboro College. My first job out of college was with the fledgling state arts agency, followed by 21 years in Washington as Senator Patrick J. Leahy’s chief of staff, deputy assistant to President Clinton and then First Lady Hillary Rodham Clinton, and founding director of the Veterans History Project at the Library of Congress’ American Folklife Center. The thinking, writing, and creative skills I learned prepared me for decades of service in the public arena.

Some colleges and their associations, such as the American Association of Colleges and Universities, are already working to define civic engagement and its relationship to student success and the demonstration of leadership skills. Dickinson College surveyed alumni and found, for example, that nearly 90 percent participated in volunteer work and 95 percent made a financial contribution to a nonprofit organization. At Marlboro College, students, faculty and staff convene monthly in a Town Meeting to discuss and decide the standards by which we conduct our community life together at this small liberal arts college. Students learn to present their arguments cogently and persuasively; they also learn to challenge a point with which they disagree with evidence and reasoning. These are valuable skills for practicing democracy.

My challenge, especially to leaders of liberal arts colleges, is twofold: to devise the attributes that belong in a Civic Scale and to join Marlboro College in creating one to highlight this crucial aspect of our mission.

Many leaders of liberal arts colleges and some other institutions are disappointed by the new College Scorecard from the Obama administration, observing that its measures leave out much of the true value of a higher education. But it’s not enough for us to say we think our model of education produces value. We need to start to analyze and measure outcomes beyond income if we are to challenge the idea that institutions should be judged primarily by how much their graduates earn one year after graduation.

Our democracy is threatened today by lack of participation by all segments of our society, including our optimistic and energetic young people. Corporate and secret money looms over our elections. The narrowing of media outlets means that it’s harder to find the tough investigative journalism and information that shine light on government policies and elected officials’ behaviors.

At a time when we must reanimate our democracy, let’s cooperate on a Civic Scale that shows the profound value of educating our future citizens. We want our students to thrive in their lives; that means finding jobs and supporting families. It must also, however, include finding meaning in life in service to others and to the country.

We must redefine “return on investment” to include civic behaviors that support our diverse and participatory democracy. As Thomas Jefferson said, "An educated citizenry is a vital requisite for our survival as a free people."

 

Ellen McCulloch-Lovell is president of Marlboro College, in Vermont.

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Course-by-course approval of MOOCs may not be wise (essay)

With great interest, I read the recent news announcing that the American Council on Education (ACE) had evaluated five Coursera MOOCs and recommended them for credit. But I had hoped for something different.

Having traditional prestigious institutions making their online content open to the world – of course without their prestigious credit attached – was an exciting development. A race to post courses ensued. On the surface, it’s an altruistic move to make learning available to anyone, anywhere for free.

Dig deeper and we are left to ask, how many MOOC courses will really be worth college credit, where will the credits be accepted, and for how long will college credits even be the primary measurement of learning?

Now that ACE has evaluated a few courses, MOOC providers will see how their process goes as students start actually finding proctors and taking tests -- or finding other methods of assessment -- to prove they learned the material. But a few courses will not be enough to really help students earn degrees, and with MOOC courses and providers continuing to proliferate, this does not seem like a viable way to keep up with demand.

Regardless, it is more than likely that the universities that agreed to the ACE CREDIT review are never going to accept an ACE CREDIT transcript themselves. The students with ACE CREDIT transcripts will need to present those transcripts to “lesser known” schools that are not among the elite players – colleges with much lower tuition and a willingness to serve post-traditional students.

More troubling is the fact that the ACE process for credit review is still course-based. Will this really be flexible enough in the future? Will it measure competencies and individual learning outcomes? Even if it seems scalable, will it mean all MOOC evaluations have to run through ACE and only ACE? Will students have to wait until ACE has evaluated a MOOC course before they can get credit?

Moreover, this raises the question: Are course evaluations and testing really the best or only way to deal with this new era of learning? What about experiential learning? If someone has college-level learning from their life experience is it invalid unless they take a course?

As Inside Higher Ed points out in its article, this was a fast move in an industry that moves at a glacial pace. But when ice really begins to melt, it can quickly turn into a waterfall. Students have more options for learning, and can get more information, from a variety of sources. So the question for education becomes, how can we best accommodate that?

I would assert that a portfolio assessment of students’ learning is the best way. Just as an artist shows a portfolio to a prospective employer, students should be able to demonstrate learning from wherever they have learned -- work, MOOCs, informal training, military service, volunteer service, and more -- all in one place. And much of this learning will not involve a course at all.

If MOOCs are to be truly disruptive, they must link to competencies, credentials, degrees and/or ultimately jobs. Using a course-by-course, credit hour-by-credit hour approach to do this will not dramatically change the way people earn degrees. And dramatic change that allows for individual demonstrations of competencies is the only way to provide the education quality and agility necessary to truly recognize learning derived from free resources on the web.   By focusing on competencies, we can align and accept learning experiences from everywhere.

Pamela Tate is president/CEO of the Council for Adult and Experiential Learning.

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Students in South Hit Hard by Pell Changes

Changes in Pell Grant eligibility rules likely contributed to enrollment declines last year at two-thirds of the community colleges in Alabama, Arkansas and Mississippi, according to new research from the University of Alabama's Education Policy Center. The three Southern states all enroll large numbers of students who hail from rural and low-income areas, but also lack large, state-based financial aid programs. That makes students in the region particularly sensitive to last year's tightening of Pell eligibility by the U.S. Congress, according to the report.

Study: Aid Alters Parental Contributions for Students

Government-provided tuition subsidies "crowd out" parental contributions to their children's college educations, although the effect is much more pronounced for students from wealthier families than for those from lower-income backgrounds, a study published Monday by the National Bureau of Economic Research asserts. The paper, written by two economists at the University of British Columbia and scholars from Yale and New York University (abstract available here), applies economic modeling to test how various changes in federal financial aid policy would play out if they were put in place. Among other things, the researchers estimate that "every additional dollar of government grants crowds out 20-30 cents of parental [intergenerational transfers of wealth] on average," but that "while for wealthy parents with high ability children public subsidies crowd out private transfers, poorer parents tend to reinforce government subsidies since the expected return to their transfers increases when college becomes more attainable, particularly for those with high ability children."

The researchers also say their data show that the federal financial aid programs contribute meaningfully to the public welfare. "Indeed, we estimate that the combined system of federal aid to college students (grants and loans) is worth 2.5 percent of GDP," they write.

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